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Tax Reform, Tax Planning and Future Finances: What are the Pros Saying?

Tax Reform, Tax Planning and Future Finances: What are the Pros Saying?

Welcome to 2018! We ended 2017 with a new tax bill and now need to see how these new laws will affect our new year and years ahead.  There's still a lot of commotion around tax cuts and the tax bill so there's much to discuss. Today we're chatting with industry leaders, tax experts and small business owners to see what their thoughts are on How Tax Reform Will Affect Tax Planning and Future Finances. 

  • What advice would you give to individuals who typically have a large employee business expense deduction, such as long haul truck drivers with away from home expenses or mechanics that have large tool expenses?
  • Who will benefit the most from the pass through deduction?
  • Do you think the Tax Cuts and Jobs act simplified taxes or made it more complicated?
  • What do you see as the benefits of uncoupling a child's tax return from the parents?
  • Do you think the tax bill will, long term, enhance the tax preparation business or hurt it?

These are just a few of the questions the pros discussed and debated in today's chat.

Thank you to everyone who participated! Be sure to check out the highlights of the chat below.

 @TaxBuzzOnline will be hosting a #TaxBuzzChat on Twitter the first Wednesday of every month at 10am PT/1pm ET. Our next chat will be Wednesday, February 7th. Don't miss out on the next hot topic!

Q3. What advice would you give to individuals who typically have a large employee #business expense deduction, such as long haul truck drivers with away from home expenses or mechanics that have large tool expenses? #TaxBuzzChat #businesstips pic.twitter.com/0C26mO6oXa

A3. Employees who can't go the ind contractor route (bc not all can, clearly) should consider renegotiating with their employers. And not just highly-paid individuals: Many employers may be willing to help defray costs - you have to ask. #TaxBuzzChat

a3. As employee business expenses are no longer deductible you may want to negotiate with your employer higher salary to compensate for those expenses. #taxbuzzchat

a3. (cont) Some may want to convert to “independent contractor” status, however consider possible loss of company provided group health insurance and the increase Self-employment tax over FICA taxes #taxbuzzchat

A3. I would suggest they go to their employer and work out some sort of accountable reimbursement arrangement.  #taxbuzzchat

A3 - first place to start would be trying to get the employer to cover or reimburse these expenses since these expenses won't be deductible to the employee any longer.#TaxBuzzChat @taxbuzzonline

since this change came so late in 2017, could be a financial issue for companies to come up with more compensation for employees (even w/savings from new lower corp tax rate & GOP hopes/wishes) #taxbuzzchat

A3  Renegotiate base salary and/or request expense reimbursement

What @FidelisCPA said. I suspect companies will join employees in not being thrilled with this change. #taxbuzzchat https://t.co/3cjZ5kuxpn

Q3 - I see many people trying to get reimbursements from employer or looking into sole proprietorship or entity so they can continue to deduct their out of pocket expenses (plus maybe getting the 20% pass-thru deduction) #TaxBuzzChat

Frankly, most of my clients never benefitted from this due to high AGI. So not guessing the impact will not be significant for those who make “more” than the average Joe.  Advice was to explore oppty for Schedule C over 2106. #TaxBuzzChat https://t.co/q1I5o6rotH

Q5. Who will benefit the most from the pass-through deduction? #TaxBuzzChat #taxreform pic.twitter.com/DyAylrgbQS

A5. Wealthy business owners stand to gain from a provision in the #GOP #taxbill that creates a deduction for owners of pass-through businesses, experts say. #taxbuzzchat #passthroughdeduction #passthrough #taxreform

A5 Small business owners will benefit from the pass-through deductions. However personal service corps must be careful, (#Doctors, #Lawyers, #Accountants). As there is an income threshold that will eliminate the deduction.  #smallbusiness #taxbuzzchat https://t.co/gUXVLtsZgB

A5 From the analysis I have done so far, looks like businesses with lots of wages and high cost personal tangible equipment. #taxbuzzchat

Q5: I think a lot of taxpayers with a small business with income under the $315000 (or $157500) phaseout range will get a benefit because all the limitations don't apply - go middle-income personal service entities and sole proprietors! #TaxBuzzChat

A5. TP's with non-personal service business who own sole props, PS interests, & S-corp interests who have taxable income below the threshold amounts of $157,500 for singles and 315,000 for MFJ #taxbuzzchat

A5. Businesses that are able to take advantage of the 199A deduction will be the clear winners. There are a lot of considerations to make sure the client pays the least amount of #tax that is allowed.  #TaxBuzzChat #taxreform https://t.co/ff64rZL3EC

A5 - a lot of small businesses will benefit. However, I think some will be surprised to learn about the way it's calculated and that they could be subject to limits.#TaxBuzzChat @taxbuzzonline

Q6. Do you think the #TaxCutAndJobsAct simplified #taxes or made it more complicated? #TaxBuzzChat pic.twitter.com/0cSoGw4M2W

A6. I think it depends on who you are. A wage earner with a relatively simple investment scheme and limited deductions likely has an easier go. Certain business owners and quasi-employees now have some potentially significant planning issues. #TaxBuzzChat

A6. Wage earners (w-2) will see simpler #tax filing, however businesses will need professional help to make sure they are limiting their tax burden. #taxbuzzchat https://t.co/rGZw8YLUgF

A6. The Section 199A deduction can be pretty complicated so there was no simplification there.  The other changes will slow practitioners down until they get used to the changes especially the increased CTC and limited itemized deductions. #taxbuzzchat

A6: just the latest in Congress' Perpetual Tax Professionals' Full Employment legislation  #taxbuzzchat

Reality is that the answer depends on several factors:

1) sophistication

2) ability to understand application

3) how changes affect you

4) AGI

5) etc...

In other words, it depends.#TaxBuzzChat https://t.co/PpfAOruQA8

A6. Simplified for some individuals, more complicated for #BusinessOwners - but this comes with potential benefits that make the additional complexity worthwhile. #TaxBuzzChat #Taxes #TaxCutandJobsAct https://t.co/OtCgzfJLM5

A6 - This was never about simplification. I will give them the presumption that they didn't intend to make it more complicated, but it turned out way more complicated.#TaxBuzzChat @taxbuzzonline

A6. This is not Simplification. AMT stays. Estate Tax stays. We still need to know who is a dependent, even though the exemption is zero.

A6. W/ so many changes, compliance is definitely going to be more complicated while practitioners wait for clarification. And federal changes will definitely lead to state tax changes. @taxtweet has a good write-up on the general situation: https://t.co/MIKhdjAFYk#taxbuzzchat

My experience on Capitol Hill is since most in Congress have no real tax knowledge, they just follow politicians' path of making promises and expect staff, IRS, taxpayers to adjust as best we can #taxbuzzchat https://t.co/C9BOFqox1j

Q7. What do you see as the benefits of uncoupling a child's tax return from the parents? #TaxBuzzChat #taxreturn pic.twitter.com/p8IKz0U5BW

A7 The child can have more tax free earned income because of the $12,000 standard deduction.  But having to use fiduciary tax rates on unearned income will be a tough pill to swallow.  #taxbuzzchat https://t.co/LhFKCk5FPB

Q7. Makes life a little easier for computing the child's own income. Without exemptions, return is simplified. @taxbuzzonline #taxbuzzchat

A7 No, other than don't have to wait for Mom & Dad's tax return. Now that kids pay the trust rates on investment income, may report fewer kids on own tax return.  #taxbuzzchat

Q10. Do you think the #TaxBill will, long term, enhance the tax preparation business or hurt it? #taxbuzzchat pic.twitter.com/eZN0fHLEcr

A10. It's time to face the fact that taxpayers with basic tax returns don't need us. They can use FreeFileAlliance for free. #taxbuzzchat

A10  It will keep corporate #accountants busy for years to come. And no taxpayer will ever see the postcard-size tax return. As Jim Tankersley wrote for the New York Times, this #TaxBill “creates as many new preferences for special interests as it gets rid of” #taxbuzzchat

a10 Well, with the CTC computations and the pass-through deduction calculations we certainly won't be seeing a post card return.  #TaxBuzzChat https://t.co/LYoZsYRqie

A10 - I think this enhances the tax prep needs of middle & higher income individuals. Some lower and low-mid income individuals probably can just take the standard and don't need #taxpro help anymore.#TaxBuzzChat @taxbuzzonline

A10.  It will help the #TaxPreparation business. There are a tremendous amount of planning opportunities in the new bill to help clients reduce their income #taxes. #TaxBuzzChat #TaxBill #TaxPlanning https://t.co/Us2HI0DUGX

Re: A10 - If anything, seeing the process of how #taxreform impacts the tax preparation business will be quite interesting. #taxbuzzchat

Yes! I keep telling people that and no one listens. The catch is helping people decide when the time is right to hire a #TaxPro #TaxBuzzChat @taxbuzzonline

— Brian Streig, CPA (@cbriancpa) January 3, 2018

If you're looking for a funny tax puns here are a couple for you courtesy of Laura Lieberman and Joann Doan:

A6, part 2. #SALT deduction cap has already started shaking things up at state and local level for property taxes, e.g. prepayment. https://t.co/Fm95NwLqdU (recent @BloombergTax post on the matter) #taxbuzzchat

Did you catch my #SALT/ "shaking" pun? ;-) It's the only bad pun I've managed to come up with so far. #taxbuzzchat

I'd tell you some #tax jokes, but I doubt you'd depreciate it! #taxbuzzchat https://t.co/ljiLQUSp1B

— Joann Doan (@JoannTaxBuzz) January 3, 2018

We had a great time chatting with our participants on such a hot topic. If you have any additional questions, feel free to use our #TaxBuzzChat hashtag or tweet us at @taxbuzzonline. You can view all the questions and full conversations here.

We'll be hosting #TaxBuzzChat the first Wednesday of every month at 10am PT/12pm ET for our monthly discussion on all things tax and accounting.  

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TaxBuzz Staff

TaxBuzz Staff

Our experts cover the hot topics in tax, personal finance and business planning. Follow us on @taxbuzzonline to get the latest updates year round.

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